Ford's profits plunge by 58%

Ford Motor Company yesterday reported a 58 per cent plunge in its fourth-quarter profits and a 22 per cent fall in its 1995 earnings from 1994, making it the worst performer among the big three US car-makers last year.

Earnings for the fourth quarter fell to $660m (pounds 437m) or 49 cents per share, compared with $1.47 in the previous corresponding period, when profit was $1.6bn. Ford's full-year 1995 profit was $4.1bn or $3.58 per share, down from 1994's record $5.3bn.

Both General Motors, the number one car-maker in terms of size and Chrysler, number three, have reported better-than-anticipated 1995 earnings. Chrysler reported 1995 profits of $2bn earlier this month, including a gain in sales. Earlier this week GM announced record 1995 earnings of $6.9bn, albeit due to a lower tax rate rather than gains in earnings.

Ford blamed its poor results on a drop in North American sales volumes, costs associated with product launches in North America and Europe, adverse results in Brazil and Mexico and the effects of currency exchange rates.

The market took the news in its stride. "Ford's earnings were not a surprise because management has been warning that earnings would be on the weak side," said James Solloway, car industry analyst at Argus Research in New York.

"Even so, they are not good and we are unlikely to see any powerful rally in Ford's share price," Mr Solloway added.

Analysts said Ford was not doing anything untoward to cause the drag on earnings. "I don't think it's doing anything wrong. It's just that it is in an uncomfortable position in its product launch cycle. GM was in the same position in 1994," Mr Solloway said.

Despite its results, 1995 was Ford's fourth-best year ever, according to the company.